Which of the Following Statements Is True

question 10

Multiple Choice

Which of the following statements is true?

• A) Investors have a foreign bias in portfolio holdings.
• B) Investors have a home bias in portfolio holdings.
• C) International investors prefers optimal international portfolio.
• D) The foreign bias in portfolio holdings is consistent with portfolio theory.

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Definitions:

Public Choice Analysis

The study of political behavior using methods and principles of economics, focusing on the self-interest motives of participants and the impact of their behavior on public policy.

Rational Personal Choice

The decision-making process by individuals that results in the optimal level of benefit or utility for the individual, based on personal preferences and available information.

Personal Benefit

The advantage or gain that an individual receives from making a decision or undertaking an action.

Public Choice Theory

An economic theory that studies how public decisions are made and how public policies are shaped, considering individuals as self-interested agents.